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Anadarko Petroleum Puts profits over safety cited from testimony

Six former high-ranking employees and a former contractor for Anadarko Petroleum Corp. say in court documents that Colorado’s largest energy driller put profits over safety, creating massive risks before a leaking company pipeline caused a fatal home explosion in Firestone in April 2017.

The statements are contained in an amended class-action lawsuit filed by shareholders in November. The shareholders contend that the company created a “ticking time bomb” in its Colorado operations by ignoring safety and environmental hazards.

The shareholders claim the company failed to disclose in corporate filings the risks and that it was out of compliance with environmental and health and safety regulations. Those disclosures could have prevented them from investing money in the company that they lost when the stock plummeted after the blast in Firestone that leveled a home and killed two people.

The lawsuit alleges that Anadarko did not follow rules from the Colorado Oil and Gas Conservation Commission, which regulates the oil and gas industry. Anadarko on 2,400 occasions failed to follow rules requiring it to seal off abandoned flow lines, including a flow line investigators have determined leaked odorless gas into the house that exploded in Firestone on April 27, 2017, according to the lawsuit.

The lawsuit further alleges that Anadarko in 2017 concealed during a commission hearing the cause of a leak of 28,000 gallons of oil in Weld County, which the company had determined was due to a lack of skilled staff. Prior to that spill, the lawsuit contends, Anadarko chose to proceed with a “quick fix” to the well despite the company determining there was a 50 to 60 percent chance doing so would cause the well to explode.

Details of the litigation and the statements from former Anadarko employees and a contractor for safety inspections were first reported by The Colorado Independent. The value of Anadarko shares fell from $61.21 the day before the Firestone explosion to a low of $40.52 by Aug. 30 — a loss of about a third of its value. By the close of trading Tuesday, shares had rebounded to $67.04.

Lawyers representing the shareholders revealed the statements from the former employees and contractor in the amended complaint, which was filed in U.S. District Court in Houston. They do not detail how those statements were gathered, but they state that confidentiality was “neither promised nor requested” and that the names “will be provided to defendants or the court upon request.” The Denver Post confirmed the identities of two.

One former employee is Chris Castilian, Anadarko’s former regional director of government relations for the Rockies region.

“Operations had the veto power, drilling wells was the priority,” Castilian said in statements the lawsuit attributes to him. “Operations trumped everything else within the company.”

Castilian also was the director of engagement and strategy for Anadarko’s Rockies region from March 2015 until his resignation in November 2016.

Castilian was a key player behind the formation in 2013 of Coloradans for Responsible for Energy Development, an industry public-relations front group that in its first three years of operation raised $30 million from drilling companies to flood airwaves with pro-industry messages and to send canvassers into local municipalities to combat ballot initiatives aimed at restricting drilling across the Front Range.

In an interview with The Post, Castilian said he got a call from a lawyer representing the shareholders and decided to tell him about his concerns, which he said began to build after former Anadarko chairman and CEO Jim Hackett resigned from the company in 2012.

“It was a different culture,” said Castilian, now executive director of Great Outdoors Colorado. “It wasn’t the same company I went to work for in 2007. There wasn’t one specific incident that made me think, ‘I’m leaving the company.’ But it was part of a bigger picture of ‘Do I want to continue working with and staking my personal and professional reputation on a company that wasn’t what I thought it was.’ “

The other employee is Robin Olsen, Anadarko’s government and public affairs manager from July 2012 to March 2017. Olsen did not return telephone messages seeking comment.

The lawsuit alleges that Anadarko paid only “lip service” to safety concerns and slashed money for community relations, safety and remediation after the price of oil fell beginning in the fall of 2014.

Anadarko officials declined to comment on the issues raised in the litigation. “Although we do not comment on specific allegations in pending litigation, the company looks forward to the opportunity to substantively respond through the judicial process when appropriate,” Jennifer Brice, the company’s current spokeswoman, wrote in an email.

COGCC officials said they had not yet reviewed the allegations.

“We expect the highest safety, ethical and professional standards from industry,” agency spokesman Todd Hartman said. “On this specific matter, we have not reviewed this lawsuit and it is too early for us to comment on any of its claims.”

The lawsuit alleges that Anadarko laid off 20 to 30 percent of its workforce after the collapse in oil prices and that the “remaining employees were not sufficient to perform operations.”

It contends that Olsen raised concerns during an internal meeting that Anadarko should inform state regulators that the company had determined a 28,000-gallon oil spill near Hudson, northeast of Denver, on Jan. 20, 2017, had been caused by a lack of trained personnel. During the meeting, Olsen was rebuffed and told by John Christiansen, senior vice president of communications, to stop complaining as her job was to “shovel (expletive) and clean up the messes that (Anakarko’s employees) make,” the lawsuit states.

Olsen informed the lawyers suing that Anadarko did not have adequate skilled staff to ramp up production when prices rebounded, the lawsuit states. She also has said that a single employee was responsible for checking the safety of all Anadarko flowlines in the Wattenberg field in Weld County, where Firestone is located, when there should have been 20 to 30 employees, the lawsuit states.

Olsen brought up her concerns about inadequate staffing with Christiansen on at least 12 occasions, and also told three other officials at Anadarko before “she quit in disgust,” the lawsuit alleges.

The lawsuit said Castilian told the lawyers that safety issues at the company became more pronounced in Oct. 21, 2013, after Anadarko and its chief competitor, Noble Energy, finalized a land swap. As part of that transfer, Noble received land Anadarko had owned in a sparsely populated corner of Colorado in exchange for portions of the Wattenberg field, just north of Denver, in an area booming with residential and commercial construction.

The land swap gave Anadarko the right to drill along with more than 1,500 existing wells, many of which had been drilled up to 50 years before on land that was once rural but had since become prized for residential and commercial development, the lawsuit states. The wells that were obtained in the swap included the one that investigators have linked to the Firestone explosion.

Castilian has said “Anadarko was not able to inspect anything more than a tiny proportion of the wells it was acquiring from Noble,” and the “problems with the wells Anadarko received in the land swap were far out of proportion to what it was expecting,” the lawsuit alleges.

Castilian also has made statements that Anadarko had a list of up to several hundred “risky and problematic wells” that its safety staff ranked on a spreadsheet. The company’s executive committee authorized a remediation budget in the low tens of millions of dollars for dangerous wells, the lawsuit alleges Castilian said.

“At first, Anadarko prepared to actually spend the budget on remediation,” the lawsuit alleges. “However, with the collapse of oil prices in fall 2014, Anadarko drastically reduced the remediation budget. Thereafter, Anadarko dedicated only a trickle of resources to remediation.”

It adds that Castilian has said remediation and repair budgets for old wells fluctuated with commodity prices. Such work was deemed important by the company when commodity prices reached $100 a barrel, according to statements attributed Castilian, but “was very rarely a significant percentage of the capital allocation in a lower commodity price environment.”

At the same time, according to Castilian, Anadarko had an incentive to turn on and keep running the wells it had received from Noble, even if those wells were in desperate need of repairs, the lawsuit states. This is because Anadarko leased 60 percent of the land where it operated in the Wattenberg and terms generally required the company to operate the wells to maintain the leases, the lawsuit alleges Castilian said.

Christopher N. Osher: 303-954-1747, '); document.write(addy15589); document.write('<\/a>'); //-->\n This email address is being protected from spambots. You need JavaScript enabled to view it. "> This email address is being protected from spambots. You need JavaScript enabled to view it.  or @chrisosher

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